Chapter 14.9, Problem 52E

Predicting Charity Expenses. Charity Navigator is America’s leading independent charity evaluator. The following data show the total expenses ($), the percentage of the total budget spent on administrative expenses, the percentage spent on fundraising, and the percentage spent on program expenses for 10 supersized charities (Charity Navigator website). Administrative expenses include overhead, administrative staff and associated costs, and organizational meetings. Fundraising expenses are what a charity spends to raise money, and program expenses are what the charity spends on the programs and services it exists to deliver. The sum of the three percentages does not add to 100% because of rounding.

Source: Charity Navigator website, (https://www.charilynavigator.org/)

1. a. Develop a scatter diagram with fundraising expenses (%) on the horizontal axis and program expenses (%) on the vertical axis. Looking at the data, do there appear to be any outliers and/or influential observations?
2. b. Develop an estimated regression equation that could be used to predict program expenses (%) given fundraising expenses (%).
3. c. Does the value for the slope of the estimated regression equation make sense in the context of this problem situation?
4. d. Use residual analysis to determine whether any outliers and/or influential observations are present. Briefly summarize your findings and conclusions.